Can Black Entrepreneurship Reduce Black-White Inequality in the United States?
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ORIGINAL ARTICLE
Can Black Entrepreneurship Reduce Black-White Inequality in the United States? Susanne L. Toney 1 & Gregory N. Price 2 Received: 13 April 2020 / Revised: 23 September 2020 / Accepted: 29 September 2020 # Springer Nature Switzerland AG 2020
Abstract This paper considers whether Black entrepreneurship in the USA matters for Black-White inequality in well-being as measured by individual happiness. We utilize data from the 2018 General Social Survey on respondent self-reported levels of happiness to estimate fixed group effect logit specifications of self-reported happiness levels as a function of individual characteristics, including being a Black American, and a measure of entrepreneurship—self-employment. Parameter estimates reveal that accounting for self-employment entirely eliminates Black-White happiness inequality. Our results suggest that increasing Black entrepreneurship can reduce Black-White inequality in well-being as measured by happiness. JEL Classification C25 . D63 . I31 . J15 . L26 . O52 . Z13 Keywords Black entrepreneurship . Happiness . Inequality
Introduction The historically persistent socioeconomic inequalities between Blacks and Whites in the USA have been the topic of a vast social science literature (Andrews 1999; Bonilla-Silva 2006; Darity and Myers 1998; Price and Darity Jr 2010; Tonry 2010; Velez et al. 2003; and Loury 2009). The existence of race-based wealth disparities (Brown 2016; Altonjii and Doraszelski 2005) suggests a possible role for entrepreneurship in ameliorating racial inequality (Boston 2002; Bradford 2014; Butler 2012; and Wallace 1997) as both selfemployment and business ownership provide opportunities for individuals to realize capital gains (Hamilton 2000)—a source of wealth (Keister and Moller 2000). While much of the racial inequality literature has focused on inequalities in
* Susanne L. Toney [email protected] Gregory N. Price [email protected] 1
School of Business, Hampton University, Hampton, VA 23668, USA
2
Urban Entrepreneurship and Policy Institute, University of New Orleans, New Orleans, LA 70148, USA
material well-being based on standard measures that presumably matter for individual welfare (e.g., housing, employment, income), increasingly, economics is appealing to alternative non-material measures of well-being based on experienced utility (Kahneman et al. 2004) such as happiness to assess individual welfare, as an individual’s happiness can be compatible with preference satisfaction and optimization across material commodities (MacKerron 2012). Given evidence that there is racial inequality in happiness in the USA (Assari 2019; Cummings 2019; Dutta and Foster 2013; Easterlin 2001; Stevenson and Wolfers 2008; Thomas and Hughes 1986; Yang 2008) and that entrepreneurship appears to increase subjective self-reported measures of wellbeing (Andersson 2008; Benz and Frey 2004; Binder and Coad 2013, 2016; El Harbi and Grolleau 2012; Nataraajan and Angur 2014; Naude et al. 2014; Seva et al. 2016), this paper considers whether Black en
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